I think your reaction is a bit too strong, which perhaps makes you miss a subtler point better. This use of the word "chemical" seems to be a thought-terminating cliché of sorts and I would argue it is precisely what leads to overreaction in cases such as dihydrogen monoxide.
People learn to associate "chemical" with "bad" and a certain class of "chemical-sounding" names with "chemical". It would be better if the lay knowledge and perception of chemicals was more nuanced, so that it is realized that chemicals are not bad due to their membership in this category, but for other, more complex reasons.
There are bad chemicals and there are good chemicals, and there is no shortcut to knowing which is which other than putting effort into understanding the mechanisms.
I think penalising this usage of the word "chemical" might further this goal.